Reconciling Yourself To Financial Success

HUMBERTO CRUZ ASK HUMBERTO

By calling my bank's 24-hour toll-free number, I can check my total and available balance, the last 10 deposits and withdrawals, and whether any particular check has cleared.

I then immediately update the figures I keep in my home computer. That way I don't risk running below the minimum balance to avoid fees, let alone bouncing a check. And I verify that all the bills have been paid, so I don't risk a late charge.

"Reconciling" or "balancing" your checkbook, a task some surveys suggest as many as 20 percent of Americans neglect, is an essential task on the road to financial literacy and success. You cannot be free of financial worries if you have no idea how much money you have available to pay your bills.

With today's sophisticated tools -- automated telephone systems, financial tracking software and download of account statements -- keeping track of your account balance can be a snap. But if all you use is paper and pencil, you can still keep track accurately.

Here are some tips, based on the advice of financial experts and my own experience:

If you've never balanced your checkbook, begin now, entering the balance on your last statement as a starting point.

From this moment, keep track of not only your total balance but also your available balance. If you write a check for more than the available balance, it will bounce even if your total balance is enough to cover it.

Therefore, make sure you understand how long you must wait before the checks you deposit are available for withdrawal. If ever in doubt, check with your bank before writing a check.

Whenever you make a deposit, write a check or make or authorize a withdrawal, keep track on your running total. Do NOT wait until you get your bank statement. Use the statement to verify your entries, not to make them.

Be aware of monthly service fees, per-check charges, automated teller machine fees and other charges, and keep track of them as they occur. By shopping around carefully I have managed never to pay a bank fee, not even for ordering checks.

As soon as you get your bank statement, check that your figures are correct and that the statement has no errors. Banks make mistakes, too, as I have found out a couple of times. The sooner you spot an error, the easier it is to fix it.

These are the basic steps. Now for more "advanced" tips:

Put the system on autopilot as much as possible. I have my freelance writing payments and the interest and dividends from all my investment accounts automatically deposited into my checking account. If you work for an employer, ask to sign up for direct deposit of your paycheck.

Every monthly payment I make is done by automatic debit, including the electric bill; local and long-distance telephone bills, cable television, utilities and Internet service provider. (I call my bank a couple of times a week, mostly to verify these deposits and payments have been made).

I did not wait to be offered the automatic debit -- I asked for it, and got it every time, for free. In general, your payees will like it because it eliminates delays and checks lost in the mail.

I even pay my monthly credit card balance, in full, by automatic debit from my bank. Again, I asked the card issuer for this feature. Of course, I make sure I have enough money in my checking account to pay the bill when it comes.

Avoid trips to the ATM machine.

Here is where being disciplined pays off. Some financial advisers recommend you do not make large cash withdrawals or use credit cards too much because you'll be tempted to spend more than usual.

But the alternative, paying with cash and making several smaller withdrawals, could run up expensive ATM fees.

I do it differently, paying everything I can -- groceries, gasoline, sundries at the drugstore, even movie tickets -- with my credit card. The money to pay the card bill is debited on the due date from my checking account.

My system benefits me two ways: The credit card statement provides a detailed record of my expenses, and the card issuer offers cash rebates and other rewards. By using this system, I went all of 2001 making just three withdrawals from the ATM machine, all free with my bank's debit card.